Tribunal Grants Permission to Appeal on Fair Rent Cap

OUTCOME: Allowed

First-tier Tribunal – Property Chamber File Ref No. CAM/22UC/F77/2023/0041

Notice of the Tribunal Decision

Rent Act 1977 Schedule 11

Address of Premises The Tribunal members were 78 [ADDRESS], [POSTCODE]

[NAME]

Landlord

[RESPONDENT] [NAME]

1. The fair rent is 226.00 Per Week (excluding water rates and council tax but including any amounts in paras 3&4)

2. The effective date is 17 November 2023

3. The amount for services is

Per

negligible/not applicable

4. The amount for fuel charges (excluding heating and lighting of common parts) not counting for rent allowance is 0.00 Per

negligible/not applicable

5. The rent is/is not to be registered as variable.

6. The capping provisions of the Rent Acts (Maximum Fair Rent) Order 1999 apply (please see calculation overleaf)/ do not apply because 1st registration/15% exemption.

7. Details (other than rent) where different from Rent Register entry

8. For information only:

(a) The fair rent to be registered is the maximum fair rent as prescribed by the Rent Acts (Maximum Fair Rent) Order 1999. The rent that would otherwise have been registered was £ per including £ per for services (variable).

(b) The fair rent to be registered is not limited by the Rent Acts (Maximum Fair Rent) Order 1999, because it is the same as/below the maximum fair rent of £ per including £ per for services (variable) prescribed by the Order.

Chairman

Date of decision

MAXIMUM FAIR RENT CALCULATION

LATEST RPI FIGURE X

PREVIOUS RPI FIGURE Y

X

Minus Y

= (A)

(A)

Divided by Y

= (B)

First application for re-registration since 1 February 1999 YES/NO

If yes (B) plus 1.075 = (C)

If no (B) plus 1.05 = (C)

Last registered rent*

Multiplied by (C) =

*(exclusive of any variable service charge)

Rounded up to nearest 50p =

Variable service charge YES / NO If YES add amount for services

MAXIMUM FAIR RENT = £ Per

Explanatory Note

1. The calculation of the maximum fair rent, in accordance with the formula contained in the Order, is set out above.

2. In summary, the formula provides for the maximum fair rent to be calculated by:

(a) increasing the previous registered rent by the percentage change in the retail price index (the RPI) since the date of that earlier registration and

(b) adding a further 7.5% (if the present application was the first since 1 February 1999) or 5% (if it is a second or subsequent application since that date).

A 7.5% increase is represented, in the calculation set out above, by the addition of 1.075 to (B) and an increase of 5% is represented by the addition of 1.05 to (B).

The result is rounded up to the nearest 50 pence.

3. For the purposes of the calculation the latest RPI figure (x) is that published in the calendar month immediately before the month in which the Tribunal’s fair rent determination was made.

4. The process differs where the tenancy agreement contains a variable service charge and the rent is to be registered as variable under section 71(4) of the Rent Act 1977. In such a case the

variable service charge is removed before applying the formula. When the amount determined by the application of the formula is ascertained the service charge is then added to that sum in order to produce the maximum fair rent.

© CROWN COPYRIGHT

FIRST-TIER TRIBUNAL PROPERTY CHAMBER (RESIDENTIAL PROPERTY) Case reference : CAM/22UC/F77/2023/0041

Property

: 78 [ADDRESS] [POSTCODE] Applicant : [redacted] Representative : [COUNSEL] [NAME] (Agent) Respondent: [redacted] :

None

Type of application : Application by the Appellant for review & permission to appeal Tribunal :

[NAME] & Venue :

22 February 2024 First Tier Tribunal (Property) HMCTS Cambridge [POSTCODE] Date of decision : 22 February 2024

DECISION

Decision

1. The Tribunal has considered the applications for a review and permission to appeal, dated 4 January 2024 and determines that: (a) it will not review its decision of 17 November 2023 (‘the Decision’); but

2 (b) permission to appeal, is granted.

2. In accordance with section 11 of the Tribunals, Courts and Enforcement Act 2007 and rule 21 of the Tribunal Procedure (Upper Tribunal) (Lands Chamber) Rules 2010, the landlord may appeal to the Upper Tribunal (Lands Chamber). Such application must be made in writing and received by the Upper Tribunal (Lands Chamber) no later than 14 days after the date on which the First-tier Tribunal sent notice of this decision to the party applying for permission to appeal. In this case permission to appeal has been granted by the First Tier Tribunal.

3. For further details, the Upper Tribunal (Lands Chamber) may be contacted at: 5th [ADDRESS] [POSTCODE] (tel: 020 7612 9710); or by email: [EMAIL] Reason for the Decision 4. “The requirement of leave to appeal requires one to submit one’s grounds of dissatisfaction for scrutiny to see whether they have sufficient merit to justify an appeal.” [[NAME] v SoS for the Home Department [2001} 1 WLR 443, per Hale LJ @459]. However; “It is Parliament’s wish and intention that resources should not be devoted to continuing appeals at higher levels if an appeal fails to cross the threshold test of permission to appeal.” [[NAME] v [COMPANY] [2004] EWCA Civ 1269, per Brooke LJ @ 31].

5. Rule 55, Property Chamber Rules 2013, restricts the power of review: “The Tribunal may only undertake a review of a decision – (a) pursuant to rule 53 (review on an application for permission to appeal); and (b) if it is satisfied that a ground of appeal is likely to be successful.” 6. The [NAME] stated in their application for review and permission to appeal the decision, that: “I am writing to appeal the decision as I believe it is wrong in law in that it incorrectly applied a cap.” 7. The [NAME] continued: “The decision stated that the registered rent was £167.00 per week (Paragraph 1) on 31.03.2020. The decision said the correct rent for the premises should be £275 per week as stated in Paragraph 14 . In Paragraph 16, the tribunal then applied the fair rent cap without even considering the effect of the landlords improvements.” 8. The [NAME] continued: “However in paragraph 6, the decision described improvements made by the landlord in May 2022 of a new bathroom suite, central hearing, loft insulation and various kitchen improvements, with invoices.” 9. The [NAME] continued: “It is obvious that these improvements will have increased the rental value by far more than

3 15% indeed, the increase from previous rent of £167 to £275 is an increase of 65%. It was therefore an error in law for the tribunal a) not to consider disapplying the cap and b) to apply the cap, as the improvements were clearly way in excess of 15%.

10. The [NAME] concluded: “I am requesting the full rent of £275 to be applied.” 11. In paragraph 6 of the Decision, the Tribunal simply set out in brief, the landlord’s representations, without further comment.

12. The Tribunal’s Decision sets out two fair rent figures: 1. the uncapped rent of £275 pw and 2. the capped rent of £226 pw. If the Tribunal is wrong about the application of the Maximum Fair Rent Cap (MFRC) then the Tribunal in its Decision has already set out that the Fair rent to be registered would otherwise be £275 pw, the same as the applicant claims.

13. The rent of £275 pw exceeds the rent that would otherwise be set at this review, without the improvements of; “a new bathroom suite, central heating, loft insulation and various kitchen improvements” at £235 pw. This rental figure was regrettably omitted from the earlier Decision. A rent of £275 pw being at least 15% more than a rent of £235 pw, the MFRC would not apply, however it would depend on whether Paragraph 7 of the Order, applied.

14. The issue raised by the [NAME], centres around whether The Rent Acts (Maximum Fair Rent) Order 1999 (The Order) applies to the final Fair rent to be registered here, on this occasion, or not. The Tribunal accepts that it did not deal at length with this issue in its Decision but, identifies paragraph (7) of the Order as the relevant element in determining whether the MFRC applies.

15. Paragraph 7 of the Order reads: “This article (the Maximum Fair Rent Cap) does not apply in respect of a dwelling-house if because of a change in the condition of the dwelling-house or the common parts as a result of repairs or improvements (including the replacement of any fixture or fitting) carried out by the landlord or a [NAME], the rent that is determined in response to an application for registration of a new rent under Part IV exceeds by at least 15% the previous rent registered or confirmed.” 16. The Tribunal accepts from the representations made, that there had been; 1. “a change in the condition of the dwelling house”. That it had been; 2. as “a result of repairs or improvements (including the replacement of any fixture or fitting”.

3. But, the Tribunal was unconvinced that these were demonstrated to be the result of works that were all; “carried out by the landlord.” 4. The Tribunal accepts that as a result of the works set out, the rent under Part IV would have exceeded the previously registered Fair rent, by at least 15% as set out in paragraph 13 above.

4 17. Whilst paragraph 7 of the Order allows for a further category of actor regarding the works, it remains very narrowly drawn as a “[NAME]” only, suggesting that no further widening of the term is envisaged. There was no [NAME] identified or claimed to exist at this Property. No other actor or agency which might have “carried out” the works here, is mentioned for in the Order.

18. On the evidence received prior to its Decision, the Tribunal took the view that; it was the [RESPONDENT]’s own financial status and/or benefit entitlement that enabled it, to obtain and directly commission, or to obtain and indirectly commission, sufficient works at the Property, that would increase the rent by at least 15% of the Fair rental value of the Property. That the works that took the rental value to a new Fair rent that was at least 15% higher than the previous registration, were completed in whole or part with the landlord’s consent at most but, that a consent, did not amount to the landlord carrying them out even if they were to the Property in the ownership of the landlord. On such evidence, the Tribunal found that the MFRC remained in place.

19. The Tribunal is however mindful of the increasing use of grant assistance available to residential tenants and/or which is only available to the [RESPONDENT] and/or is dependant on the [RESPONDENT]’s status or at the [RESPONDENT]’s sole application and landlords simple consent. Often such assistance is conditional on the [RESPONDENT]’s financial or other particular status, which may be individual to that [RESPONDENT] or to a wider class of tenants, in the repair and especially in the improvement of a dwelling.

20. The Tribunal considers that a wider consideration and a clarification of the correct application of this Order to substantial rental increases commonly occurring, would be of a more general assistance to other landlord, tenants and Tribunals, when determining new Fair rents.

21. The Tribunal is satisfied that the grounds stated above by the applicant, are arguable and that there is the realistic prospect of success.

22. The Tribunal gives permission for the landlord to appeal the Decision to the Upper Tribunal. Such permission extends as to whether the Order applies or does not apply, only.

23. The new Fair rents resulting from either conclusion were already set out in the Decision and leave is not given to appeal either of these: A new Fair rent of £226 pw is to be registered if the Order applies; or a new Fair rent of £275 pw is to be registered if the Order does not apply.

[NAME]

22 February 2024